retail

The retail sector is bouncing back from pandemic lows. 2Q21 managed services ACV in the retail sector is up 58% Y/Y. Very strong growth to be sure, but it’s important to remember that 2Q20 was really when the IT services market hit its lowest point, so the comparison can skew results. But, when you compare results on a half-year basis, it’s clear the retail sector is bouncing back: the $843 million in ACV generated in the first half is the retail sector’s second-best half-year result in history – just behind the $918 million in ACV generated in 1H18 (see Data Watch).
 
Retailers were obviously hit incredibly hard during the worst of the pandemic – and most needed to take out costs quickly. But taking cost out was not going to solve the fundamental challenge in this sector: thanks to Amazon, customers expect the same experience from whatever channel they are using – in-store, curbside, online – or a combination of all three. The pandemic simply accelerated a transformation that already needed to happen.
 
The challenge is that many retailers learned this too late. Those that had started their transformation pre-pandemic were in a better position to weather the storm than those that had not. And given the forecasted growth of this sector – between 10.5% to 13.5% in the U.S. – our POV is that retailers are going to be spending even more to accelerate their transformation to a hybrid company that meets customers’ rapidly changing expectations and can withstand the impact of a global pandemic.

Data watch

automation

Salesforce just added RPA to its enterprise portfolio, with the acquisition of German company Servicetrace (link). Salesforce plans to fold the new acquisition into its MuleSoft business, which it acquired for $6.5 billion in 2018. Salesforce joins a growing list of big software companies that are acquiring RPA capability, including Microsoft, which bought Softomotive in 2020, and ServiceNow, which bought Intellibot this year.
 
But it’s not just big tech that wants to be the go-to for automating and connecting data and processes across the enterprise technology stack. The RPA vendors want to fill that role, too. The challenge is that many of these workflows will require an API-level integration, rather than screen-based automation. In fact, UiPath acquired API integration platform Cloud Elements earlier this year to become the de facto enterprise automation and integration platform, which is creating an interesting inflection point in the market: will the automation of the enterprise be led by IT from the API layer up, or by the business from the screen down?
 
And by the way, if you’re interested in keeping up with important automation trends, I highly recommend you subscribe to my colleague Wayne Butterfield’s podcast, Bots and Beyond. Wayne’s a pioneer in this market – he started using RPA way back in 2010 – and he has immense RPA and cognitive automation practitioner knowledge. You can subscribe to Wayne’s podcast here.

deal activity

M&a

Stay safe and have a great weekend!
 
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isg insiders

Stanton Jones, Alex Bakker, Cynthia Batty, Dr. Daniel Gerster, Doug Saylors, Missy Lawrence-Johnson, Mrinal Rai, Ron Exler, Sashidharan Balasundaram, Steve Hall, Sunder Sarangan, Troy Williams

contributing this week

John Westfield, Wayne Butterfield